Sunday, February 8, 2009

Pensions for SHG members

With elections round the corner, the the government of the state of Andhra Pradesh in India have announced a landmark three-in-one pension cum insurance cum scholarship scheme for women Self Help Group (SHG) members and their families, Abhaya Hastham or Indira Kranti Patham Pension scheme.

Nearly 12.5 million women are expected to benefit from the scheme, which promises pension of Rs 500-2000 to every SHG memeber above 60 years. The members have to contribute a minimum of Rs 1 per day, which will be matched by the State government, and the money so accumulated will form a pension fund, to be managed by the Life Insurance Corporation (LIC). Besides the pension, the scheme also covers its members with life insurance and student scholarship for their children. The government has earmarked Rs 365 Cr in the budget for the program.

The scheme can deliver greater social bang for the buck if its subscription is made conditional to the members achieving certain specific social desirables like sending children to school, universal immunization for children, provision of nutritional supplements to children, adoption of birth control operations, attending adult literacy programs etc. It can also be linked to the thrift activity of the group. The scholarship part of the scheme too can be structured in a manner so as to incentivize better school performance. Monitoring the fulfilment of these conditions, while difficult, is not impossible.